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Fraud*According to the Collins English Dictionary 10th Edition fraud can be defined as: "deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage".[1] In the broadest sense, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation. Defrauding people or entities of money or valuables is a common purpose of fraud, but there have also been fraudulent "discoveries", e.g. in science, to gain prestige rather than immediate monetary gain*As defined in Wikipedia

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wheresthefreemarket
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Questions Over Goldman Deal as Investors Sit in the Dark

The fight raises such a cornucopia of financial issues that it could shoulder an entire business school course. The holders of preferred stock in the company have taken to commenting to the Securities and Exchange Commission in outrage. Professor Angel accuses Goldman of multiple securities law violations. In essence, the question is: In these post-financial crisis days, what constitutes improper conflicts of interest?

In 2007, a Goldman private equity fund called Whitehall took a company that runs franchised motels, like Residence Inn, private in a $2.2 billion transaction. It renamed the company W2007 Grace Acquisition. A Goldman entity, Goldman Sachs Mortgage Company, was the main lender for the leveraged buyout. Grace is run by current Goldman employees.

Goldman did not buy the publicly traded preferred shares, however. Instead, Grace went “dark,” as Floyd Norris explained last year. That meant it no longer filed financials with the Securities and Exchange Commission, a move allowed for companies with fewer than 300 shareholders. Grace delisted from the New York Stock Exchange and stopped paying dividends. It took other steps to make it difficult for anyone, including the preferred holders, to get any information about the company. Shareholders had to request the financials from the company and, at one point, had to pay 10 cents a page for the privilege of finding out how their investment was doing. They also had to sign a nondisclosure agreement.

In 2012 and 2013, a mysterious entity named PFD Holdings started buying those battered-down preferred shares. In 2012, PFD was paying $3 to a little more than $5 a share. Soon after, the preferred doubled in price, and now the shares trade at about $12. As of its last announcement, PFD owns 58 percent of the preferred shares. Nice trade!

So, what is PFD Holdings? Few outsiders really know because there’s little information out there about PFD. In Grace’s news releases, the company calls it a “sister company.” In other words, Goldman is ultimately behind PFD. I asked a former Goldman executive. He hadn’t heard of it but jokingly suggested the initials stood for Pretty Fishy and Dodgy. Well, in truth he used another “F” word, but you get the idea.

When deals like this go down, I feel like we are nation of Jake Gitteses, watching big bank deals with incomprehension. In “Chinatown,” the private detective asks the wealthy baron Noah Cross: “Why are you doing it? How much better can you eat? What could you buy that you can’t already afford?”

The scary thing about this Grace deal is that the money is so small (well, relative to Goldman, at least). The preferred shares amounted to about $146 million initially. It’s almost as if Goldman does it because it can.

At least now we know why Bernanke took the Fed-head job rather than remain in his cushy ivory tower at Princeton. Now Bernanke can afford to enjoy the same luxuries as do the Wall Street his money printing and bailout policies enriched.

But I would be much more interested in seeing Bernanke’s meeting schedule that does not get reported. I know Greenspan had one that would surprise all of you. One of my best friends in NYC, Jerry Epstein (now deceased from diabetes), was a top-notch chef who did many gigs with very wealthy people. He chef’d for people like Carl Icahn, Michael Steinhardt, Mickey Drexler (J Crew/GAP) and Doris Duke. Around the time Greenspan retired from the Fed, Jerry was Steven Cohen’s personal chef. About two weeks after Greenspan left the Fed, Jerry called me to tell me that he was preparing a meal for Greenspan, who was having lunch with Cohen at his residence in Westchester (his home was in Westchester, his office was Stamford, Connecticut). While I got the details Jerry’s menu, I would have been more interested in the menu of what would be discussed.

I bring this up because, while Bernanke’s visible speaking engagements are actively reported, I can guarantee you that he is conducting very private, non-disclosed meetings for which I’m sure he’s paid much higher “consulting fees” than his publicly announced speech compensation. After all, how many of you heard about Greenspan’s one-on-one luncheon meeting with Steven Cohen? It’s not the news you see that should bother you, it’s the news that doesn’t get reported that is most dangerous.

NY Fed Joins War On Whistleblowers To Shield Goldman Sachs From Its Own Examiner

And this sort of egregious behaviour from a 'regulator.' They argue out of both sides of their mouths whether Goldman is a 'bank' or not, in order to get what they want for... Goldman.

The Fed is not a government agency, but a privately owned creature of the very Banks whom it is charged to regulate and restrain.

And as we have seen, over and over again, the Fed is not part of the solution, but has become very much a part of the problem in distorting the banking system in favour of a few powerful financial interests.

A Mangled Case of Justice on Wall Street By Pam Martens May 8, 2014

If this Federal Court allowed a regulator to twist a Federal whistleblower law inside out and upside down, it would be sending a chilling message to every other bank examiner in America: keep your mouth shut or you too can be fired with impunity.

The unfairness of the proceeding was heightened when just 20 days before the Judge issued her written decision on April 23, she convened a phone conference with both sides to make a shocking announcement: “it had just come to her attention that her husband…was representing Goldman Sachs in an advisory capacity” according to the telephone conference transcript.

Judge Abrams’ husband is Greg Andres, a partner at law firm Davis Polk & Wardwell LLP who previously worked under Lanny Breuer in the Criminal Division of the U.S. Department of Justice. (Breuer announced his resignation one day after the PBS Frontline program reported that “when it came to Wall Street, there were no investigations going on. There were no subpoenas, no document reviews, no wiretaps.”) To date, not one key executive at any Wall Street bank that played a role in the financial collapse has been indicted.Following that telephone conference, Segarra’s lawyer, Linda Stengle, filed a letter with the court asking for a more complete disclosure of the Judge’s husband’s relationship with Goldman Sachs.

Wall Street Firms Using Their Dark Pools To Make Markets in Their Own Stocks

These self-named dark pools are operating as private exchanges, with a faux type of specialist system managing the order book, with all the insight and power that it entails. The layman may not quite comprehend this, but anyone familiar with Wall Street operations and history will certainly do so.

That they are trading for their own parent company stocks, and possibly for their own books, ought to raise more than a few eyebrows.

We ought to have internalized the lesson by now that markets are not naturally efficient and self-regulating. But even moreso when the business of price setting and order matching is being done in darkness, and apparently with lax regulatory oversight.

The lack of integrity in the Western financial system must seem appalling to anyone whose ears are not firmly taped to the corporate news feed droning out of New York and London.

The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustainable recovery.

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Famous Quotes

The men the American people admire most extravagantly are the greatest liars; the men they detest most violently are those who try to tell them the truth. … H.L. Mencken

An age is called Dark not because the light fails to shine, but because people refuse to see it…James Albert Michener, novelist (1907-1997)

It is impossible to calculate the moral mischief, if I may so express it, that mental lying has produced in society. When a man has so far corrupted and prostituted the chastity of his mind as to subscribe his professional belief to things he does not believe he has prepared himself for the commission of every other crime. … Thomas Paine 1737-1809, Anglo-American Political Theorist, Writer

Laws just or unjust may govern mens actions. Tyrannies may restrain or regulate their words. The machinery of propaganda may pack their minds with falsehood and deny them truth for many generations of time. But the soul of man thus held in trance or frozen in a long night can be awakened by a spark coming from God knows where and in a moment the whole structure of lies and oppression is on trial for its life.: Sir Winston ChurchillWhen governments fear the people, there is liberty. When the people fear the government, there is tyranny. - Thomas Jefferson

When cheaters prosper, we end up with the worst possible system and to call it a free market system is an obscenity. -William BlackWhen the people fear their government, there is tyranny; when the government fears the people, there is liberty." - Thomas JeffersonI believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property - until their children wake-up homeless on the continent their fathers conquered. Thomas Jefferson - 1802

Don't be afraid to see what you see.

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